Analysts Predict Australian House Prices to Drop by 5% 2022-2023

australian house prices drop

Latest Housing Prices Australia News indicates that the Australian housing market is on the verge of a “volatile” price upheaval, as imminent interest rate hikes and COVID-19 restrictions threaten to bring the current real estate boom to an end. According to senior experts at industry research firm IBISWorld, Australian house prices would drop by 5.2 percent in 2022-23, with some areas such as Sydney’s inner suburbs expected to drop by as much as 9.2 percent.

Australian House Prices Expected to Decline 2022 – 2023 For Multiple Reasons

After soaring by 18.1% in 2021-22, the highest yearly increase in Australian history, the forecasted drop comes as a welcome relief to the scores of potential buyers wanting to secure an affordable property. Sadly for many people, the opportunity to buy a home during the most recent housing price bubble Australia-wide has been an impossible undertaking due to job uncertainty due to the impact of Covid, overall rising living costs including an increase in property prices and rising rents.

We saw the lifting of many Covid restrictions of late as the country embraces a ‘new normal’—   a far cry from life as we knew it prior to the pandemic but one that at least enables lots of people to return to some sense of freedom as the country heads for herd immunity through multiple doses of vaccines, social distancing, self-isolation for anyone with symptoms and/or testing positive, as well as strict lockdowns where outbreaks had occurred.

Exactly When will Australian House Prices Crash & For How Long?

Following the largest annual increase in history, Australian house prices are expected to decline in the coming year. The property market faces a variety of challenges, according to Matthew Reeves, a senior industry analyst at IBISWorld with a wide range of issues having contributed to the gloomy prognosis for property values including monetary policy, the COVID-19 pandemic’s consequences, a loss of consumer and investor confidence as a result of the Russia-Ukraine crisis, and a hangover from recent soaring home prices.

The housing market will be relieved by looming interest rate hikes and rising living costs. The Reserve Bank of Australia lowered the cash rate to 0.1 percent in concern that COVID-19 would carve an unrecoverable path through the economy, which has been blamed for much of Australia’s property boom.

Now, with rising inflation, the central bank may be obliged to raise rates sooner than many homebuyers anticipated during the pandemic’s peak. [Pressure from other international reserve banks may drive the RBA to raise the cash rate in 2021-22, but more likely in 2022-23,] said Mr. Reeves.

Looming Australian Housing Market Crash = More Affordable Housing?

We’ve been getting lots of buyers and sellers sharing their concerns about Australian house prices and they’ve been asking our agents questions like will house prices drop in 2022, when will Australian house prices crash, and by how much? They are also worried about the impact that rising interest rates will have on the Australian housing market overall including related issues like increased rent prices, hikes in the general cost of living, and housing affordability, especially for first-home buyers.

Previous government-based housing incentives for home buyers included the Home Building Grant, Regional Grants, and the First Home Buyers Grant (ongoing) in efforts to assist the building industry in a time of crisis. Anyone wanting to buy property was encouraged to build a new home, with combined grants totaling $45,000 which allowed first-time homebuyers a clear advantage to enter the property market.

With increased building costs and material delays, fewer people are taking advantage of the First Home Owners Grant nowadays, instead choosing to wait it out. Likewise, the increasing record-high housing prices Australia is seeing are taking their toll. According to IBISWorld, interest rates will grow at a 0.27 percentage point annual rate to 1.45% in 2026-27. Rising mortgage rates will almost certainly be exacerbated by tighter lending requirements, the analysts predict.

[This is thanks to the Banking Royal Commission, which imposed better lending criteria for low-income borrowers. Borrowers are more susceptible to tiny changes in interest rates during high levels of family debt, and debt stress could induce a decrease in housing prices,] according to the report.

What About Hervey Bay? Will House Prices Drop in 2022? Will There be Brighter Days Ahead?

The median house price in Australia Sydney and Melbourne especially, sky-rocketed last year to new records, as did property prices in Hervey Bay.  The latest data shows comparable sold house prices from the last twelve months but with the new predictions, these recently inflated property prices won’t be the most accurate property value estimator Australia wide as things change.

So, how will affect Fraser Coast Hervey Bay property prices is yet to be seen, although there is every chance that we too will see a substantial decrease in property prices as both investors and homeowners face financial pressures incurred due to interest rate hikes. If interest rates do increase and lending criteria tighten up, no doubt as the supply chain of homes coming on to the market also increases, it is highly likely that we will see the property market change from a seller’s market to that of a buyers’ market which will result in lower house prices in the area.

housing prices australia dropping - Fraser Coast Hervey Bay
Housing Prices Australia. Hervey Bay Property Prices. Will House Prices Drop in 2022?

We will have to patiently wait to see if there are any new government grants or assistance packages to help with buying a home in the coming year or so. Hopefully, as job vacancies decrease and more people find sustainable work enabling them to adequately provide for their families; things will turn around all across the country. For Hervey Bay residents that are fortunate enough to call the region home, we know that we are truly the lucky ones that live in paradise.

Have a Hervey Bay or Maryborough Property you’d like to sell? We can help with our Pay on Success Guarantee. Get In Touch With Our No Risk No Sale No Fee Estate Agents

If you’d like to know more about our no sale no fee real estate offer or would like a free appraisal we’re here to help. Phone our office directly on 07 4125 6692 or speak to senior broker sales manager Brian Thompson on 0438 132 215  for more information.


If you are looking to buy, check out our current listings for sale.

You may also find these informative blog posts about buying and selling in Hervey Bay helpful as well.

How Can Parents Help Their Child to Buy a House?

What is a Turnkey House and Land Package?

Hervey Bay Property Prices. Optimum Lifestyle. Huge Growth.

Booming Real Estate in Hervey Bay Investment Property Opportunities



What is the current trend in Australian real estate prices?

House prices are generally always on the rise, although analysts are predicting Australian property prices to drop by 5% during 2022-2023 due to interest rate increases and rising living costs.

What are the factors that affect Australian house prices?

Australian property prices are influenced by a number of factors. These include the type of housing, location, the state of the economy, and population growth. More recently, however, the Covid19 virus has heavily impacted global property prices.

Are house prices in Australia dropping?

House prices in Australia are starting to drop, but not at the same rate as in other countries. This means that Australians are still paying high prices for their homes, but they’re not as high as they were before.

How can I find out if my property is worth more or less than it was a year ago?

The best way to find out if your property is worth more or less than it was a year ago is to consult with a real estate agent. You can also do some research on your own by looking at the average sale price for comparable properties in your area.

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